For the President, it is the song “I Did It My Way.” The 2024 budget stands at ₱5.768 trillion, which is equivalent to what he proposed to Congress in June. This amount is ₱1.5 trillion higher than the revenues that the government expects to collect in 2024. This means that the government will have to finance ₱1.5 trillion through loans. The forecast revenues for 2024 are a bit ambitious and assume that the government will collect ₱544 billion more next year—almost a 15% increase in the collections of the Bureau of Internal Revenue and the Bureau of Customs.  

Our song for the coming year is “Good Luck, Good Health, God Bless You.”

The Vice President’s song must be “Missing You.” The public outcry against the proposed confidential funds for the Office of the Vice President and the Department of Education was vehemently loud. It is a no-brainer that funding for learning programs to pull our students from being second from the bottom in the latest examination of the Program for International Student Assessment is of greater priority than the perception that students are being recruited by the communist New People’s Army. The greatest antidote to the rise of terrorism is giving our students equal access to quality education. 

We heartily join the chorus of carolers singing “A Million Thanks to You,” especially to the Senate committee on finance chaired by Sen. Sonny Angara, who even disallowed the use of the contingency fund to finance intelligence funds. We were informed that the intelligence fund is now exclusively allowed to the Office of the President.

The budget is a most important public finance tool. Without financing, the government’s promises for a better life for its citizens become empty. Our dreams for better health services, modern airports, concrete roads, faster internet, and good schools can only be realized with an efficient budget. The budget is the instrument where the nation’s wealth purportedly coming from the wealthy is redistributed to the poor.

Since our resources are limited, trade-offs are inevitable, and the theme from the movie “Sophie’s Choice” is an apt musical score. Departments that were noted to be receiving lower resources compared to their 2023 budget are those of Agriculture, of Health, of Energy, and of Education. Luck smiled on the state universities and colleges and on the Departments of National Defense, of Public Works and Highways (DPWH), of Tourism, of Trade and Industry, of Social Welfare and Development (DSWD), of Justice, and of Environment and Natural Resources because Congress increased their budget compared to what was proposed by the Executive. 

The departments/offices that suffered reduction in their budgets compared to what was proposed include those of Labor and Employment and of Migrant Workers, the Commission on Higher Education, and PhilHealth (Philippine Health Insurance Corp.) 

We can only surmise the lawmakers’ reasons for the hefty increases of the favored departments. Were these departments performing well, or do they have greater potential for stimulating growth compared to the others?  We cannot also explain why the greatest bounty went to Congress, whose budget increased to ₱43.5 billion compared to ₱28.4 billion that was proposed by the Executive. Is there a song entitled “What are We in Power For?”  

Congress’ decision-making process in allocating the budget is purportedly rich in debates and assessment. But the reality is, it is probably richer in lobbying and horse-trading. The budget is an instrument of legislative control. Deliberating on it is a time for legislators to demand favors from offices in the Executive.  

During my time in government, budgetary hearings were devoted to airing complaints regarding personnel appointments and requests that were not granted.  The Executive had no choice but to kowtow to legislators whom it had offended. What a wasted opportunity! Budgetary deliberations could have been the platform for Congress to exact accountability from Cabinet secretaries who have not attained their targets or who used their budgets inefficiently.  

On the brighter side, we are hopeful that the increased appropriation for the Armed Forces of the Philippines (up by ₱7.65 billion compared to what was proposed) would give greater credence and strength to our presence in the West Philippine Sea. The hefty increase in the budget of the DPWH (up by ₱173.9 billion from what was proposed) would result in better highways and infrastructure. And the ₱48-billion increase in the DSWD budget compared to its allocation in 2023 would make the poor a bit happier and less hungry.

We join Celine Dion and Andrea Bocelli in their song “The Prayer” so that every peso in the 2024 budget would be spent with no taint of corruption and inefficiency.  We all deserve a Happy Christmas and a Brighter New Year.

Milwida Guevara served as undersecretary of finance in the Ramos administration. —Ed.

The post Music and lyrics from the 2024 budget appeared first on CoverStory.

The surge is triggering concerns that the high cost of real property in the city will hamper sales and further make homes unaffordable to most people, especially the Gen Z and millennials.

With a land area of 46.57 square kilometers and a population of about 690,000, Parañaque is bordered by other cities—to the north by Pasay, to the northeast by Taguig, to the southeast by Muntinlupa, to the southwest by Las Piñas—and by Manila Bay to the west.

The zonal values of residential land are also going up effective Oct. 13 in Laguna’s Calamba City, the birthplace of National Hero Jose Rizal and host to subdivisions such as Ayala Greenfield Estates and Nuvali, as well as industrial and technology parks.

In both cities by a bay (Calamba by Laguna de Bay), zonal values of all other real property—land for commercial, industrial, institutional and agricultural use, residential and commercial condominiums, parking slots and cemetery lots—are also rising. 

The municipalities of Los Baños, Sta. Cruz, Pila, Victoria, Bay and Calauan—all in Laguna province—will also see their zonal values climbing starting on Oct. 13. 

The zonal value, if higher than the declared selling price and the market value set by the assessor, is the basis of the Bureau of Internal Revenue (BIR) in imposing taxes on the sale and transfer of real property. The higher the value, the bigger the taxman’s take. 

In Parañaque, one of the steepest increases is for residential land on Alpine Street in Merville Subdivision, which saw a 327% jump from P15,000 per square meter to P64,000, or an average yearly increase of 65.4%  between 2018 and 2022.

Alpine, Amsterdam, Anchorage, Athens, Barcelona, Beirut, Belvedere, Cairo, Calcutta and Carmelite Streets have been consolidated to Merville Park Subdivision, and all now have a zonal value of P64, 000 per sqm.

The improved accessibility of Merville, made possible by the opening of the C-5 Road extension linking Parañaque with the BGC central business district and the connection between C- 5 and Cavite Expressway, has certainly pushed real estate prices upward.

Too much

But a quadrupling of zonal values over the past few years in a subdivision where airplanes regularly pass overhead as it is beside Ninoy Aquino International Airport raises questions about the method the BIR has employed, especially when it is not explained to taxpayers.

No wonder a resident and property owner wanted to know the justification for the increases. “What is their basis? Why increase that much?” the resident said. “Grabe naman ito (This is too much). The increases should be reasonable.”

CoverStory.ph sent a message to a member of Revenue District Office (RDO) 52’s technical committee on real property valuation, for comments. The RDO 52 committee member, who is an appraiser, broker and consultant, did not respond. 

The subdivisions that saw double- or triple-digit increases include:

• Fortunata Village 1 and 2, from P15,000 to P25,000, up 67%
• BF Homes 1, from P25,000 to P42,000 on Avelino Street and P48,000 on El Gaches Street, up 68% and 92%, respectively
• BF Homes 2, 3, 4-A, 5 and 6, from P20,000 to P40,000 for Phase 2, up 100%; to P42,000 for Phases 3 and 5, up 110%; and to P48, 000 for Phases 4-A and 6, up 140%.
• Multinational Village (most streets), from P13,000 to P48,000, up 269%.
• Better Living (Sun Valley), from P15,000 to P50,000, up 233%.
• Moonwalk Village (Phases 1, 2 and 3 but excluding those on Neil Armstrong Avenue and those near Bricktown), from P10,000 to P35,000, up 250%.

Way above price index

The increases are way above the residential real estate price index (RREPI) and inflation rate (both at less than 7%) in Metro Manila, where Parañaque is located, making real estate in the city an asset class that appears to have racked up the biggest increase in value. RREPI measures house price inflation.

The previous increases in zonal values in Parañaque were imposed starting on Jan. 19, 2018, and were in effect for almost six years until Sunday, Oct. 1.

The BIR can revise zonal values every three years and use these as basis for collecting capital gains, estate, creditable withholding, donor’s and documentary stamp taxes on the sale and transfer of properties. The capital gains tax (paid by the seller) and estate tax (paid by heirs) are pegged at 6% of the value of the property. 

Raising zonal values produces low-hanging fruit for the BIR. By contrast, new tax measures emanating from Congress must pass through a fine-toothed comb. Many congressional committee and public hearings, often generating heated debates, are held, and approval could take years.

The increases for residential condominium units are not as steep as those for land, but are still beyond the reach of many families:

• Amvel Mansion, from P70,000 to P80,000, up just 14%
• Chateau Elysee, from P100,000 per sqm to P120,000, up 20%
• Amaia Steps Sucat, from P100,000 to P132,000, up 32%
• Avida Tower Sucat, from P100,000 to P173,000, up 73%.

Among the condos, the distinction of having the highest zonal value belongs to Sunny Coast Residential Resort in Entertainment City, at P380,000 per sqm. Sunny Coast is a luxury development by Megaworld, boasting unobstructed views of the famed Manila sunset.

Macapagal Avenue 

For commercial land, Macapagal Avenue tops them all with a valuation of P405, 000 per sqm. from P150,000—an increase of 170 %. It is followed by nearby J. W. Diokno Boulevard with P400, 000 per sqm from P175, 000—a 128% rise.

Macapagal Avenue and Diokno Boulevard, located in the area reclaimed from Manila Bay, are where the Entertainment City (casino area), several malls such as SM MOA, and other commercial establishments are located. 

Commercial land on Roxas Boulevard, once highly priced for its view of the Manila sunset, is just 40%  of the value of land on Macapagal Avenue. The zonal value of land for commercial use on the boulevard rose 81% to P290,000 per sqm, while land for residential use went up 141% to P265,000.

Sucat, Manila Memorial Park

Expectedly, properties on Dr. A. Santos Avenue (formerly Sucat Road) command “lower” values than the newly developed properties on Macapagal Avenue and Diokno Boulevard. 

Dr. A. Santos Avenue’s zonal value for residential land rose to P100, 000 per sqm  from P40,000, up 150%, while land for commercial use is valued at P113,000, more than double the previous value of P60,000.  

Cemetery lots in two memorial parks on Dr. A. Santos Avenue saw double-digit increases. 

The value of lots in Manila Memorial Park—where former president Noynoy Aquino and his parents, former senator Ninoy Aquino and former president Cory Aquino, are buried—rose 64% to P115,000 per sqm. That of lots in Loyola Memorial Park went up 67% to P100,000 per sqm.

Residents and property owners interviewed by CoverStory.ph expressed surprise at the increases, saying they had not been notified by the BIR about any public hearing on zonal values.

“Wala (Nothing),” said Jheng Miranda, a resident of Multinational Village and an administrator of the Philippine Center for Creative Imaging, a tech-voc school in Makati City, when asked if her family had received notice about the increases. Neither were they invited to a public hearing.

Merville resident Rela de Guzman, a trade marketing manager, was in the same boat, saying “no announcement had reached” her.

Emboy, who owns a property in Moonwalk, came to know about the increase only when told about it by CoverStory.ph. 

`Very secretive’

“Myrna,” a resident of Better Living who asked that her real name not be used, said she learned about the increases only last month. “The BIR is very secretive,” she said. “Why is it that until [the last week of September] no announcement was posted at the BIR office [RDO 52] on Sucat?”

Department Order No. 049-2023 that implements the revised schedule of zonal values of real properties in Parañaque, was in fact published on Sept. 15 in a newspaper of general circulation. The order, dated Aug. 22 and signed by Finance Secretary Benjamin Diokno, said a public hearing was held on Dec. 16, 2022.

But residents and property owners did not know about the order and its publication until recently, when they started talking about the increases on social media and chat groups. The BIR clearly fell short of conducting an information campaign on the new zonal values in Parañaque.

“They rushed the approval of the increases,” said Myrna. She expressed apprehension that the money to be collected from the sale or transfer of real property would be spent without taxpayers like herself knowing where it would go, such as confidential funds for government offices and agencies.

Myrna also wondered whether her tax payments would be spent for the repair of  roads from her residence to Parañaque City Hall, or for the transfer of the RDO 52 office on Dr. A. Santos Avenue to a bigger building, with parking spaces and more seats for taxpayers.

Rush to beat deadline

Myrna observed that the implementation of the new schedule of zonal values had resulted in more people transacting with RDO 52’s One-Time Transaction system to beat the deadline and enjoy a lower tax payment at the old schedule. 

For instance, she said, in the third week of September she was at the RDO 52 office at 8 a.m. but her taxes were computed only at 2 p.m. “I paid the amount in the afternoon,” she said. 

It was worse in July when rumors about the approval of the increases began circulating, she said. The processing of all the applications for the computation of taxes lasted until 7 p.m., she complained, adding: “The review took so long for a senior citizen like me.” 

Like other residents, Myrna said the sale of properties would likely slow down given the high zonal values: “Mahirap magbenta at mahirap bumili (It’s difficult to sell and it’s difficult to buy).”

She said she expected real property taxes collected by the local government to follow suit, citing “a domino effect.’’

Beyond reach

Residents and property owners interviewed by CoverStory.ph were unanimous in saying that buying a home in Parañaque, difficult even before the increased zonal values, would be beyond the reach of many more families starting October. 

Barry, a BF Homes resident and retired bank executive, said the zonal value was usually the floor of the selling price. “So definitely, an increase in zonal values will impact property prices and the ability of ordinary Filipinos to be a homeowner,’’ he said, adding: 

“Parañaque [before the surge in zonal values] has been an area considered by families due to its relative affordability.  Increasing prices will force families further out.”

Worth 42 years of salaries

A home in Metro Manila is prohibitively expensive. It would take 42.2 years of annual salaries to buy a median home in Manila (most likely the metropolis in this context), TheStreet, a US-based financial news and financial literacy website, reported on March 21. 

TheStreet placed the cost of a median home in Manila at $212, 438, about P11.9 million, based on property listings and property studies conducted within the last 12 months from local real estate companies. 

Barry, the retired banker and a father of three, said the new schedule of zonal values would be an added expense for families. “With traffic congestion and transport prices, this will negatively impact household expenses. Families will have to sacrifice some more, as if many are not already burdened,” he said. 

He is also worried about the impact of the new zonal values on the cost of transferring property to his children. “I live in a family home. So, when the time comes to hand over the property to [my] heirs, the increase in zonal values will make the estate tax prohibitive,” he said.

The post Zonal values of residential land surging appeared first on CoverStory.

Heirs can pay the estate tax and beat the amnesty deadline even without a settlement of the estate if they can submit other documentary requirements of the Bureau of Internal Revenue (BIR).

But there’s a catch. The public is largely unaware of this mode stipulated in a revenue regulation that the BIR issued two years ago, preventing many families from availing themselves of this option.

Revenue Regulation 17-2001 states: “Proof of settlement of the estate, whether judicial or extrajudicial, need not accompany the ETAR [estate tax amnesty return] if it is not yet available at the time of its filing, but no electronic Certificate Authorizing Registration (eCAR) shall be issued unless such proof is presented and submitted to the concerned RDO [Revenue District Office].”

It adds: “After payment, the duly accomplished and sworn ETAR and APF [acceptance payment form—BIR Form No. 0621- EA] with proof of payment, together with the complete documentary requirements, shall be immediately submitted to the RDO in triplicate copies. Failure to submit the same until June 14, 2023 is tantamount to non-availment of the Estate Tax Amnesty and any payment made may be applied against the total regular estate due inclusive of penalties.”

Only a few families know about Revenue Regulation 17-2001 largely because the BIR appears not to have conducted an information campaign on it. The information is not included in BIR fliers about the estate tax amnesty. 

In the dark

Until recently, one of those in the dark about the regulation was “Aster,” an administrator of her family’s estate. She came to know about it early in May from a former colleague. Moreover, she learned about the tax amnesty and the deadline only in March from a friend who gave her a BIR flier.

“My lawyer did not say that an extrajudicial settlement (EJS) is not required to settle the estate tax. Neither did I know that the EJS can follow later,” she said, bewailing the fact that taxpayers not given complete information will expectedly find it hard to deal with the government. “They’re not helpful.” 

Like Aster, Gussie, a retired teacher and an administrator of his parents’ estate, learned about the revenue regulation only two weeks ago—not from the government but from a private chat group. 

“Now that the estate tax can be paid without an EJS, I will have the tax settled so as to relieve us of anxiety that we may not be able to beat the deadline,” said Gussie, who asked that his surname not be mentioned to avoid antagonizing certain relatives.

Gussie’s family has not come to an extrajudicial settlement because his late brother’s wife refuses to have anything to do with the estate. The separation of his sister-in-law and his late brother had not been amicable, he said. 

As a consequence, Gussie and his surviving siblings requested a court to declare their sister-in-law and her children disinterested parties. But the court has yet to rule on the matter, preventing them from settling the estate tax as they had not known about Revenue Regulation 17-2001 until a few weeks ago. 

Families that came to know about the revenue regulation and have gathered the other documentary requirements must act now. The estate tax amnesty ends on June 14.  

It’s alright if the issuance of a CAR is held in abeyance as long as heirs will no longer pay the 25% surcharge and 20% annual interest once they settle the estate tax before the deadline.

A CAR is a prerequisite for paying the transfer tax with the Treasurer’s Office of a local government where the deceased last resided, and for getting a new title in the name of the heirs from the Register of Deeds. The certificate will be issued only after the heirs come to an EJS, or a judicial settlement (JS), and submit an original copy and the proof of payment to the BIR. 

Most difficult to obtain

The EJS or JS is perhaps the most difficult to obtain among the many documentary requirements, especially when the heirs do not see eye to eye on the disposition of the property. 

Securing an EJS also poses a challenge when certain heirs are living abroad. For siblings or other relatives overseas, signing the EJS requires getting the document notarized and having it apostilled at the nearest Philippine consulate—a process that takes time. 

The revenue regulation is thus a big help to heirs: It fast-tracks the payment of the tax.

Gathering the other requirements, however, is no mean feat.

See: With amnesty, property heirs can save on costs, avoid aggravation

For close to a million families who are unlikely to beat the deadline next month, an extension may be forthcoming. 

Extension, expansion of coverage

Hopes for an extension were buoyed on May 15 when the House of Representatives approved on third reading a bill extending the amnesty for another two years, or until June 14, 2025.  A total of 259 legislators voted to pass House Bill No. 7909; no one voted against it or abstained from voting. 

The measure also seeks to expand the coverage of the amnesty to those who died in or before 2021. The current amnesty includes only those who died in or before 2017.

HB 7909 is a substitute bill to HB 7409, originally co-authored by Speaker Ferdinand Martin Romualdez, Ilocos Norte Rep. Ferdinand Alexander Marcos, Majority Leader Manuel Jose M. Dalipe of Zamboanga City and Tingog party-list Representatives Yedda Marie Romualdez and Jude Acidre.

‘An act of kindness’

Extending the amnesty period is a win-win for the government and concerned families.

Senior Deputy Speaker Ralph Recto said the families would save billions and the government would earn billions by extending the deadline to June 14, 2025. He described the extension as an “act of kindness” to vulnerable senior citizens who were prevented by the pandemic from availing themselves of the amnesty.

“If the government had extended `lifelines, bailouts in the billions’ to distressed commercial firms during the pandemic, then why should not the same compassion be extended to families?  More so that it won’t cost the government anything,” Recto, a former senator, was quoted as saying. 

The BIR has in fact exceeded its target of collecting P6 billion from the estate tax amnesty. At a meeting of the House ways and means committee in April, Revenue Assistant Commissioner Maria Luisa Belen said 133,860 taxpayers had availed themselves of the amnesty since 2019, generating P7.4 billion for the government.

The committee chair, Albay Rep. Joey Salceda, said some 920,000 Filipino families could benefit from the bill. A study by the committee found that almost a million Filipino families still have estates to settle despite the first estate tax amnesty and its subsequent extension by two years, Salceda said. 

Online filing

Speaker Romualdez, meanwhile, has urged the BIR to simplify the amnesty application procedure should HB 7909 be enacted into law, and to allow online filing, especially for heirs working overseas. 

Beside raising revenues for the government, settling the estate tax will lead to the faster distribution and use of inherited properties such as land, he said.  

The ball is now in the court of the Senate, where a counterpart bill is pending in the chamber’s ways and means committee.

The post As amnesty deadline nears, many property heirs unaware of crucial regulation appeared first on CoverStory.